2007 (8) TMI 388

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....isallowances made under the head lease rent on leased back assets. 3. Without prejudice to the ground No. 2 above, the CIT(A) is not justified in holding the transaction of sale and lease back assets as genuine and for commercial purpose when these transactions dare nothing but colourable device to avoid payment of tax as envisaged in the Hon'ble Supreme Court decision in the case of McDowell & Co. v. CTO (154 ITR 148). 4. For that the CIT(A) erred in law and in facts in deleting the disallowance of Rs. 16,84,002 made under the head foreign travel expenses when the assessee failed to prove that the expenses were incurred wholly and exclusively for the purpose of assessee's business since the documentary evidence of the business transa....

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....commission, warehousing charges and selling and other expenses simply on the basis of appellant's submission." 2. At the outset, the ld. counsel for the assessee has submitted that Ground Nos. 1 to 10 except Ground No. 9 are covered by the order of this Tribunal dated 2-5-2003 in the assessee's own case for the assessment year 1994-95 in ITA No. 281/Gau./1998. The ld. DR did not contest this fact. We, respectfully following the same, therefore, uphold the order of the CIT(A) and reject Ground Nos. 1 to 8 and 10 raised by the revenue. 3. In Ground No. 9, the revenue has objected to CIT(A)'s direction to allow deduction under section 80HHC with reference to composite income derived from growing and manufacture of tea before application ....

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....at in computing business income deduction will not be allowed in respect of amounts paid to non-residents unless the tax is deducted at source. As the assessee failed to deduct tax under section 195 of the Act the Assessing Officer rightly disallowed the expenditure of Rs. 4,00,19,421 by invoking section 40(a)(i). 5. The ld. D.R. further submitted that the assessee's reliance on Article 7 of Double Taxation Avoidance Agreement between UK and India was misplaced because no material was brought on record to prove that the services were rendered outside India. In absence of the material facts, the CIT(A) was not justified in allowing relief by simply accepting assessee's submissions. 6. The ld. A.R. stated that for sale of tea in Europea....

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.... Board's Circular No. 786. 7. We have heard the parties and perused the orders and documents placed in the paper book. The RBI had approved the agency agreements with overseas agents and had permitted payment of commission on sales conducted in foreign countries. These documents establish that the non-resident agents were appointed for promoting and conducting sale of tea through auction and private sale outside India. We also note that the RBI had approved deduction of commission and brokerage from gross sale proceeds on tea sold and remit only the net proceeds to India. The commission, brokerage and other selling expenses were paid to foreign agents for services rendered outside India. On these facts, therefore, the question is whether....

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....icability of section 195 read with section 40(a)(i) in relation to commission paid to foreign agents, as follows: "In the Audit Report for 1997-98 DP No 79(I.T.) The Comptroller & Auditor General (C&AG) raised an objection that the Assessing Officer in computing the Profits and Gains of Business or Profession, in a case in Mumbai charge, had wrongly allowed a deduction in respect of a payment to a non-resident where tax had not been deducted at source. The nature of the payment in this case was export commission and charges payable for services rendered outside India. In the view of C&AG the expenditure should have been disallowed in accordance with the provisions of section 40(a)(i) of the Income-tax Act, 1961. It has come to the notice....